EXHIBIT 10.6
SUBSCRIPTION AGREEMENT
SUBSCRIPTION AGREEMENT ("Subscription Agreement") made as of this __
day of __________________, 2006, by and among Europa Trade Agency Ltd., a Nevada
corporation (the "Company"), Ironclad Performance Wear Corporation, a California
corporation and upon the Closing Date (as defined below) a wholly owned
subsidiary of the Company ("Ironclad") and the undersigned (the "Subscriber").
WHEREAS, the Company, the Company's wholly-owned subsidiary, Ironclad
Merger Corporation, and Ironclad are parties to a certain Agreement and Plan of
Merger dated as of _________, 2006 (the "Merger Agreement"), pursuant to which a
newly organized, wholly owned subsidiary of the Company will merge with and into
Ironclad, Ironclad will become a wholly owned subsidiary of the Company, and the
existing Ironclad stockholders will obtain majority ownership and control of the
Company (the "Merger"). Immediately after the effective time of the Merger (the
"Closing Date"), the Company will change its name to Ironclad Performance Wear
Corporation and will assume, through Ironclad, its business and operations.
WHEREAS, as a condition to the closing of the Merger, the Company
intends to obtain subscriptions for the purchase and sale, in a private
placement transaction (the "Offering") pursuant to Regulation D promulgated
under the Securities Act of 1933, as amended (the "Act"), of Units (the "Units")
consisting of (i) one (1) share of the Company's common stock, par value $0.001
per share ("Common Stock"), and (ii) three-quarter (3/4) of a five (5) year
warrant to purchase one (1) share of the Company's Common Stock at an initial
exercise price of $1.00 per share (the "Warrants" and the Common Stock issuable
upon the exercise of the Warrants the "Warrant Shares"), on the terms and
conditions hereinafter set forth, and the Subscriber desires to acquire that
number of Units set forth on the signature page hereof.
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants hereinafter set forth, the parties hereto do hereby agree as follows:
1. SUBSCRIPTION PROCEDURE
1.1 Subject to the terms and conditions hereinafter set forth, the
Subscriber hereby subscribes for and agrees to purchase from
the Company such number of Units as is set forth upon the
signature page hereof at a price of $0.75 per Unit (the
"Purchase Price"). The Company agrees to sell such Units to
the Subscriber for the Purchase Price.
1.2 The subscription period will begin as of March 8, 2006 and
will terminate (if the Closing Date has not earlier occurred)
at 5:00 PM Eastern Standard Time on April 30, 2006, unless
extended by for up to an additional 90 days (the "Termination
Date"). The Units will be offered on a "best efforts" basis as
more particularly set forth in the Confidential Private
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Placement Memorandum dated March 2006 and any supplements
thereto (the "Offering Memorandum"). The minimum dollar amount
of Units that may be purchased by the Subscriber is $30,000
unless Ironclad and the Company waive the requirement. The
consummation of the Offering is subject to the satisfaction of
a number of conditions, as further described in the Offering
Memorandum, one or more of which conditions may not occur.
1.3 Placement of Units will be made by Xxxxx Xxxxxx, Carret & Co.,
and GP Group, LLC, an affiliate of Gemini Partners, Inc. (the
"Placement Agents"), each of whom will receive certain
compensation therefor as provided in their Engagement
Agreements, which are more fully described in the Offering
Memorandum.
1.4 The Purchase Price will be placed in escrow pursuant to an
escrow agreement by and among the Placement Agents, the
Company and American Stock Transfer Corporation as escrow
agent (the "Escrow Agreement"), and shall be paid over to the
Company at the closing of the purchase of the Units in the
Offering (the "Closing") to occur on the Closing Date.
1.5 The certificates for the Common Stock together with the
accompanying Warrants bearing the name of the Subscriber will
be delivered by the Company no later than fifteen (15) days
following the Closing Date. The Subscriber hereby authorizes
and directs the Company to deliver the securities to be issued
to such Subscriber pursuant to this Subscription Agreement to
the residential or business address indicated in the Investor
Questionnaire.
1.6 The Purchase Price for the Units purchased hereunder shall be
paid by certified check, payable to American Stock Transfer
Corporation, as escrow agent, or by wire transfer to American
Stock Transfer Corporation pursuant to the following
instructions:
Bank Name: XX Xxxxxx Chase Bank
ABA Routing No.: 000-000-000
Account No. 323-213251
Account Name: American Stock Transfer & Trust
Company - as agent for Ironclad
Performance Wear Corporation
1.7 The Company and/or Ironclad may, in their sole discretion,
reject any subscription, in whole or in part, or terminate or
withdraw the Offering in its entirety at any time prior to a
closing in relation thereto. Neither the Company nor the
Placement Agent shall be required to allocate among investors
on a pro rata basis in the event of an over-subscription.
2. REPRESENTATIONS AND COVENANTS OF SUBSCRIBER
2.1 The Subscriber recognizes that the purchase of Units involves
a high degree of risk in that (i) the Company will need
additional capital but has no assurance of additional
necessary capital; (ii) an investment in the Company is highly
speculative and only investors who can afford the loss of
their entire investment should consider investing in the
Company and the Units; (iii) an investor may not be able to
liquidate his investment; (iv) transferability of the
securities comprising the Units is extremely limited; (v) an
investor could sustain the loss of his entire investment; and
(vi) the Company is
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and will be subject to numerous other risks and uncertainties,
including without limitation, significant and material risks
relating to the Company's business and the business and
operations of Ironclad, and the industries and markets in
which the Company will compete, as well as risks associated
with the Offering, the Merger and the other transactions
contemplated herein, in the Offering Memorandum and in the
Merger Agreement, all as more fully set forth herein and in
the Offering Memorandum. For the avoidance of doubt, all
references to the Company in this Section 2.1 include the
Company's business and operations after it acquires the
business and operations of Ironclad through the Merger.
2.2 The Subscriber represents that he is an "accredited investor"
as such term is defined in Rule 501 of Regulation D
promulgated under the Act, as indicated by his responses to
the Investor Questionnaire, the form of which is attached
hereto as EXHIBIT A, and that he or it is able to bear the
economic risk of an investment in the Units. The Subscriber
must complete the Investor Questionnaire to enable the Company
and Ironclad to access the Subscriber's eligibility for the
Offering.
2.3 The Subscriber acknowledges that he has prior investment
experience, including without limitation, investment in
non-listed and non-registered securities, or he has employed
the services of an investment advisor, attorney or accountant
to read all of the documents furnished or made available by
the Company or Ironclad both to him and to all other
prospective investors in the Units and to evaluate the merits
and risks of such an investment on his behalf, and that he
recognizes the highly speculative nature of this investment.
2.4 The Subscriber acknowledges receipt and careful review of the
Offering Memorandum, this Subscription Agreement, the Common
Stock Purchase Warrant and the attachments hereto and thereto
(collectively, the "Offering Documents") and hereby represents
that he has been furnished or given access by the Company or
Ironclad during the course of this Offering with or to all
information regarding the Company and Ironclad and their
respective financial conditions and results of operations
which he had requested or desired to know; that all documents
which could be reasonably provided have been made available
for his inspection and review; that he has been afforded the
opportunity to ask questions of and receive answers from duly
authorized representatives of the Company and Ironclad
concerning the terms and conditions of the Offering, and any
additional information which he had requested. The Subscriber
further represents and acknowledges that the Subscriber has
not seen or received any advertisement or general solicitation
with respect to the sale of any of the securities of the
Company, including, without limitation, the Units.
2.5 The Subscriber acknowledges that this Offering of Units may
involve tax consequences, and that the contents of the
Offering Documents do not contain tax advice or information.
The Subscriber acknowledges that he must retain his own
professional advisors to evaluate the tax and other
consequences of an investment in the Units.
2.6 The Subscriber acknowledges that this Offering of Units has
not been reviewed or approved by the United States Securities
and Exchange Commission ("SEC") because the Offering is
intended to be a nonpublic offering pursuant to Section 4(2)
of the Act. The Subscriber represents that the Units are being
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purchased for his own account, for investment and not for
distribution or resale to others. The Subscriber agrees that
he will not sell or otherwise transfer any of the securities
comprising the Units unless they are registered under the Act
or unless an exemption from such registration is available
and, upon the Company's request, the Company receives an
opinion of counsel reasonably satisfactory to the Company
confirming that an exemption from such registration is
available for such sale or transfer.
2.7 The Subscriber understands that the Units have not been
registered under the Act by reason of a claimed exemption
under the provisions of the Act which depends, in part, upon
his investment intention. The Subscriber realizes that, in the
view of the SEC, a purchase now with the intention to
distribute would represent a purchase with an intention
inconsistent with his representation to the Company, and the
SEC might regard such a distribution as a deferred sale to
which such exemption is not available.
2.8 The Subscriber understands that Rule 144 (the "Rule")
promulgated under the Act requires, among other conditions, a
one year holding period prior to the resale (in limited
amounts) of securities acquired in a non-public offering, such
as the Offering, without having to satisfy the registration
requirements under the Act. Except as specifically set forth
in SECTION 4.10 hereof, the Subscriber understands that the
Company makes no representation or warranty regarding its
fulfillment in the future of any reporting requirements under
the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), or its dissemination to the public of any current
financial or other information concerning the Company, as is
required by Rule 144 as one of the conditions of its
availability. The Subscriber consents that the Company may, if
it desires, permit the transfer of the Common Stock included
in the Units or issuable upon the exercise of the Warrants out
of his name only when his request for transfer is accompanied
by an opinion of counsel reasonably satisfactory to the
Company that neither the sale nor the proposed transfer
results in a violation of the Act, any applicable state "blue
sky" laws or any applicable securities laws of any other
country, province or jurisdiction (collectively, "Securities
Laws"). The Subscriber agrees to hold the Company, Ironclad
and their respective directors, officers and controlling
persons and their respective heirs, representatives,
successors and assigns harmless and to indemnify them against
all liabilities, costs and expenses incurred by them as a
result of any misrepresentation made by him contained herein
or in the Investor Questionnaire or any sale or distribution
by the undersigned Subscriber in violation of any Securities
Laws.
2.9 The Subscriber consents to the placement of one or more
legends on any certificate or other document evidencing his
Units and the Common Stock or Warrants included in the Units
or issuable upon the exercise of the Warrants stating that
they have not been registered under the Act and are subject to
the terms of this Subscription Agreement, and setting forth or
referring to the restrictions on the transferability and sale
thereof.
2.10 The Subscriber understands that the Company and Ironclad will
review this Subscription Agreement and the Investor
Questionnaire and, if the Subscriber is a natural person, the
Company and Ironclad are hereby given authority by the
undersigned to call his bank or place of employment. The
Subscriber further authorizes the Company and Ironclad to
review the financial standing of the Subscriber; and the
Subscriber agrees
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that the Company and Ironclad reserve the unrestricted right
to reject or limit any subscription and to close the offer at
any time.
2.11 The Subscriber hereby represents that the address of
Subscriber furnished by him at the end of this Subscription
Agreement and in the Investor Questionnaire is the
undersigned's principal residence if he is an individual or
its principal business address if it is a corporation or other
entity.
2.12 The Subscriber acknowledges that if the Subscriber is a
Registered Representative of a National Association of
Securities Dealers, Inc. ("NASD") member firm, he must give
such firm the notice required by the NASD Conduct Rules, or
any applicable successor rules of the NASD, receipt of which
must be acknowledged by such firm on the signature page
hereof. The Subscriber shall also notify the Company if the
Subscriber or any affiliate of Subscriber is a registered
broker-dealer with the SEC, in which case the Subscriber
represents that the Subscriber is purchasing the Units in the
ordinary course of business and, at the time of purchase of
the Units, has no agreements or understandings, directly or
indirectly, with any person to distribute the Units or any
portion thereof.
2.13 The Subscriber hereby represents that, except as set forth in
the Offering Documents, no representations or warranties have
been made to the Subscriber by either the Company or Ironclad
or their agents, employees or affiliates and in entering into
this transaction, the Subscriber is not relying on any
information, other than that contained in the Offering
Documents.
2.14 The Subscriber agrees that he will purchase securities in the
Offering only if his intent at such time is to make such
purchase for investment purposes and not with a view toward
resale.
2.15 If the undersigned Subscriber is a partnership, corporation,
trust or other entity, such partnership, corporation, trust or
other entity further represents and warrants that: (i) it was
not formed for the purpose of investing in the Company; (ii)
it is authorized and otherwise duly qualified to purchase and
hold the Units; and (iii) that this Subscription Agreement has
been duly and validly authorized, executed and delivered and
constitutes the legal, binding and enforceable obligation of
the undersigned.
2.16 If the Subscriber is not a United States person, such
Subscriber hereby represents that it has satisfied itself as
to the full observance of the laws of its jurisdiction in
connection with any invitation to subscribe for the Units or
any use of this Subscription Agreement, including (i) the
legal requirements within its jurisdiction for the purchase of
the Units, (ii) any foreign exchange restrictions applicable
to such purchase, (iii) any governmental or other consents
that may need to be obtained, and (iv) the income tax and
other tax consequences, if any, that may be relevant to the
purchase, holding, redemption, sale or transfer of the Units.
Such Subscriber's subscription and payment for, and his or her
continued beneficial ownership of the Units and of the shares
of Common Stock included therein or issuable upon the exercise
of the Warrants, will not violate any applicable securities or
other laws of the Subscriber's jurisdiction.
2.17 The undersigned hereby covenants and agrees that neither it
nor any of its affiliates has or will have an open position
(e.g., short sale) in the Common Stock or any
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Warrant Shares prior to the Registration Statement (as defined
below) being declared effective by the SEC with the intent of
covering such open position with Common Stock or Warrant
Shares being registered in the Registration Statement. The
undersigned hereby acknowledges and understands that the SEC
has taken the position that such an open position would
constitute a violation of Section 5 of the Act.
2.18 The Subscriber acknowledges that (i) the Offering Memorandum
contains material, non-public information concerning the
Company within the meaning of Regulation FD promulgated by the
SEC, and (ii) the Subscriber is obtaining such material,
non-public information solely for the purpose of considering
whether to purchase the Units pursuant to a private placement
that is exempt from registration under the Act. In accordance
with Regulation FD and other applicable provisions of the
Securities Laws, the Subscriber agrees to keep such
information confidential and not to disclose it to any other
person or entity except the Subscriber's legal counsel, other
advisors and other representatives who have agreed (i) to keep
such information confidential, (ii) to use such information
only for the purpose set forth above, and (iii) to comply with
applicable securities laws with respect to such information.
In addition, the Subscriber further acknowledges that the
Subscriber and such legal counsel, other advisors and other
representatives are prohibited from trading in the Company's
securities while in possession of material, non-public
information and agrees to refrain from purchasing or selling
securities of the Company until such material, non-public
information has been publicly disseminated by the Company. The
Subscriber agrees to indemnify and hold harmless the Company,
Ironclad and their respective officers, directors, employees
and affiliates and each other person, if any, who controls any
of the foregoing, against any loss, liability, claim, damage
and expense whatsoever (including, but not limited to, any and
all expenses whatsoever reasonably incurred in investigating,
preparing or defending against any litigation commenced or
threatened or any claim whatsoever) arising out of or based
upon any false representation or warranty by the Subscriber,
or the Subscriber's breach of, or failure to comply with, any
covenant or agreement made by the Subscriber herein or in any
other document furnished by the Subscriber to the Company,
Ironclad or their respective officers, directors, employees or
affiliates or each other person, if any, who controls any of
the foregoing in connection with this transaction.
2.19 The Subscriber understands and acknowledges that (i) the Units
are being offered and sold to Subscriber without registration
under the Act in a private placement that is exempt from the
registration provisions of the Act under Section 4(2) of the
Act and (ii) the availability of such exemption depends in
part on, and that the Company will rely upon the accuracy and
truthfulness of, the foregoing representations, and such
Subscriber hereby consents to such reliance.
3. REPRESENTATIONS BY THE COMPANY AND IRONCLAD
Except as set forth in the reports filed by the Company
pursuant to the Securities Exchange Act of 1934, as amended (the "SEC Reports"),
each of the Company and, as applicable, Ironclad severally represent and warrant
to the Subscriber that:
3.1 ORGANIZATION AND AUTHORITY. The Company and Ironclad, and each
of their respective subsidiaries, (i) is a corporation validly
existing and in good standing under the
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laws of the jurisdiction of its incorporation, (ii) has all
requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as
presently conducted, and (iii) has all requisite corporate
power and authority to execute, deliver and perform their
obligations under this Subscription Agreement and the Offering
Documents being executed and delivered by it in connection
herewith, and to consummate the transactions contemplated
hereby and thereby.
3.2 QUALIFICATIONS. The Company and Ironclad, and each of their
respective subsidiaries, is duly qualified to do business as a
foreign corporation and is in good standing in all
jurisdictions where such qualification is necessary and where
failure so to qualify could have a material adverse effect on
the business, properties, operations, condition (financial or
other), results of operations or prospects of the Company and
its subsidiaries (after the effective time of the Merger),
taken as a whole.
3.3 CAPITALIZATION OF THE COMPANY. Immediately after the effective
time of the Merger (but before the closing of this Offering),
the authorized capital stock of the Company will consist of
172,744,750 shares of Common Stock, $0.001 par value per
share. Of the authorized capital stock of the Company,
immediately after the effective time of the Merger (but before
the closing of this Offering), there will be outstanding
19,858,404 shares of Common Stock, options to purchase an
aggregate of 2,588,314 shares of Common Stock, and warrants to
purchase an aggregate of 2,817,416 shares of Common Stock,
including warrants to be issued by the Company to certain
Ironclad investors upon consummation of the Merger, but
excluding any warrants to be issued to the Placement Agents as
described in the Offering Documents. Except as a result of the
purchase and sale of the Units, as contemplated in the Merger
Agreement or as disclosed in the SEC Reports or the Offering
Documents, there are no additional outstanding options,
warrants, script rights to subscribe to, calls or commitments
of any character whatsoever relating to, or securities, rights
or obligations convertible into or exchangeable for, or giving
any person any right to subscribe for or acquire from the
Company, any shares of Common Stock, or contracts,
commitments, understandings or arrangements by which the
Company or any subsidiary is or may become bound to issue
additional shares of Common Stock, or securities or rights
convertible or exchangeable into shares of Common Stock.
Except as described in the Offering Documents, the issuance
and sale of the Units will not obligate the Company to issue
shares of Common Stock or other securities to any person
(other than the Subscribers) and will not result in a right of
any holder of Company securities to adjust the exercise,
conversion, exchange or reset price under such securities. The
shares of the Company's capital stock outstanding immediately
after the effective time of the Merger (but before the closing
of the Offering) are or will be duly authorized and validly
issued and are or will be fully paid and nonassessable. None
of the outstanding shares of Common Stock or options,
warrants, or rights or other securities entitling the holders
to acquire Common Stock has been issued in violation of the
preemptive rights of any security holder of the Company. No
holder of any of the Company's securities has any rights,
"demand," "piggy-back" or otherwise, to have such securities
registered by reason of the intention to file, filing or
effectiveness of the Registration Statement (as defined
below), except as contemplated by the Merger Agreement and as
described in the Offering Documents. The Common Stock and the
Warrants to be issued to the Subscriber have been duly
authorized, and when issued and paid for in accordance with
this Subscription Agreement, the Common Stock will be duly and
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validly issued, fully paid and non-assessable, and the Warrant
Shares, when issued upon exercise of the Warrants in exchange
for the payment in full of the exercise price for such Warrant
Share therein specified, will be duly and validly issued,
fully paid and non-assessable. The Common Stock is eligible
for quotation on the NASD OTC Bulletin Board, the Company and
the Common Stock meets the criteria for continued quotation
and trading on the OTC Bulletin Board, and no suspension of
trading in the Common Stock is in effect.
3.4 CORPORATE AUTHORIZATION. The Offering Documents have been duly
and validly authorized by the Company and Ironclad. This
Subscription Agreement, assuming due execution and delivery by
the Subscriber, and the Warrants, when the Subscription
Agreement and the Warrants are executed and delivered by the
Company, will be, valid and binding obligations of the
Company, enforceable in accordance with their respective
terms, except as the enforceability hereof and thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium
or other similar laws now or hereafter in effect relating to
or affecting creditors' rights generally and general
principles of equity, regardless of whether enforcement is
considered in a proceeding in equity or at law.
3.5 NON-CONTRAVENTION. The execution and delivery of the Offering
Documents by the Company and Ironclad, the issuance of the
Units as contemplated by the Offering Documents and the
completion by the Company and Ironclad of the other
transactions contemplated by the Offering Documents do not and
will not, with or without the giving of notice or the lapse of
time, or both, (i) result in any violation of any provision of
the articles of incorporation or by-laws or similar
instruments of the Company or Ironclad or their respective
subsidiaries, (ii) conflict with or result in a breach by
Ironclad or its subsidiaries of any of the terms or provisions
of, or constitute a default under, or result in the
modification of, or result in the creation or imposition of
any lien, security interest, charge or encumbrance upon any of
the properties or assets of Ironclad or its subsidiaries,
pursuant to any agreements, instruments or documents filed as
exhibits to the SEC Reports or any indenture, mortgage, deed
of trust or other agreement or instrument to which Ironclad or
any of its subsidiaries is a party or by which Ironclad or any
of its subsidiaries or any of its properties or assets are
bound or affected, in any such case which would have a
material adverse effect on the business, properties,
operations, condition (financial or other), results of
operations or prospects of Ironclad and its subsidiaries,
taken as a whole, or the validity or enforceability of, or the
ability of Ironclad to perform their obligations under, the
Offering Documents, (iii) violate or contravene any applicable
law, rule or regulation or any applicable decree, judgment or
order of any court, United States federal or state regulatory
body, administrative agency or other governmental body having
jurisdiction over Ironclad or any of its subsidiaries or any
of its properties or assets that would have a material adverse
effect on the business, properties, operations, condition
(financial or other), results of operations or prospects of
the Ironclad and its subsidiaries (after the effective
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time of the Merger), taken as a whole, or the validity or
enforceability of, or the ability of the Company or Ironclad
to perform its obligations under, the Offering Documents, or
(iv) have any material adverse effect on any permit,
certification, registration, approval, consent, license or
franchise necessary for Ironclad or its subsidiaries (after
the effective time of the Merger) to own or lease and operate
any of its properties and to conduct any of its business or
the ability of Ironclad or its subsidiaries to make use
thereof.
3.6 INFORMATION PROVIDED. The Company hereby represents and
warrants to the Subscriber that the information set forth in
the Offering Memorandum, the SEC Reports and any other
document provided by the Company (or the Company's authorized
representatives) to the Subscriber in connection with the
transactions contemplated by this Subscription Agreement, does
not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the
statements therein, in the light of the circumstances under
which they are made, not misleading, it being understood that
for purposes of this Section 3.6, any statement contained in
such information shall be deemed to be modified or superseded
for purposes of this Section 3.6 to the extent that a
statement in any document included in such information which
was prepared and furnished to the Subscriber on a later date
or filed with the SEC on a later date modifies or replaces
such statement, whether or not such later prepared and
furnished or filed statement so states. Ironclad hereby
represents and warrants to the Subscriber that the information
set forth in the Offering Memorandum and any other document
provided by Ironclad (or Ironclad's authorized
representatives) to the Subscriber in connection with the
transactions contemplated by this Subscription Agreement, does
not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the
statements therein, in the light of the circumstances under
which they are made, not misleading.
3.7 ABSENCE OF CERTAIN PROCEEDINGS. Ironclad is not aware of any
action, suit, proceeding, inquiry or investigation before or
by any court, public board or body, or governmental agency
pending or threatened against or affecting Ironclad or any of
its subsidiaries, in any such case wherein an unfavorable
decision, ruling or finding would have a material adverse
effect on the business, properties, operations, condition
(financial or other), results of operations or prospects of
the Company or Ironclad, or the transactions contemplated by
the Offering Documents or which could adversely affect the
validity or enforceability of, or the authority or ability of
the Company or Ironclad to perform its obligations under, the
Offering Documents; and to the Company's and Ironclad's
knowledge there is not pending or contemplated any, and there
has been no, investigation by the SEC involving Ironclad or
any of its current or former directors or officers.
3.8 COMPLIANCE WITH LAW. Neither Ironclad nor any of its
subsidiaries is in violation of or has any liability under any
statute, law, rule, regulation, ordinance, decision or order
of any governmental agency or body or any court, domestic or
foreign, except where such violation or liability would not
individually or in the aggregate have a material adverse
effect on the business, properties, operations, condition
(financial or other), results of operations or prospects of
Ironclad or any of its subsidiaries (after the effective time
of the Merger), taken as a whole; and to the knowledge of
Ironclad there is no pending investigation that would
reasonably be expected to lead to such a claim.
3.9 TAX MATTERS. Ironclad and its subsidiaries have filed all
federal, state and local income and franchise tax returns
required to be filed and has paid all taxes shown by such
returns to be due, and no tax deficiency has been determined
adversely to Ironclad or any of its subsidiaries which has had
(nor does Ironclad or any of its subsidiaries have any
knowledge of any tax deficiency which, if determined adversely
to Ironclad or any of its
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subsidiaries, might have) a material adverse effect on the
business, properties, operations, condition (financial or
other), results of operations, or prospects of Ironclad or any
of its subsidiaries (after the effective time of the Merger),
taken as a whole.
4. REGISTRATION RIGHTS
4.1 REGISTRATION REQUIREMENT. Subject to the terms and limitations
hereof, the Company shall file a registration statement on
Form SB-2 or other appropriate registration document under the
Act (the "Registration Statement") for resale of the Common
Stock and the Warrant Shares (the "Registrable Securities")
and shall use its reasonable best efforts to maintain the
Registration Statement effective for a period of twenty-four
(24) months at the Company's expense (the "Effectiveness
Period"). The Company shall file such Registration Statement
no later than forty five (45) days after the Closing Date (the
"Registration Filing Date"), and shall use reasonable best
efforts to cause such Registration Statement to become
effective within one hundred and fifty (150) days after the
Closing Date. Subject to the conditions and limitations
hereof, including the limitations set forth in Section 4.2,
the Company's failure to satisfy the obligations specified in
the immediately preceding sentence shall require the Company
to make a cash payment, as liquidated damages, to the
Subscriber of 0.0333% of the Purchase Price of the Units sold
to the Subscriber under this Subscription Agreement for each
business day of such failure. For the avoidance of doubt, any
right to receive such cash payment shall be Subscriber's sole
and exclusive remedy for the failure of the Company to satisfy
the obligations under this Section 4.1.
4.2 LIMITATION TO REGISTRATION REQUIREMENT. Notwithstanding the
foregoing, the Company shall not be obligated to effect any
registration of the Registrable Securities or take any other
action pursuant to this Section 4: (i) in any particular
jurisdiction in which the Company would be required to execute
a general consent to service of process in effecting such
registration, qualification or compliance unless the Company
is already subject to service in such jurisdiction and except
as may be required by the Act, or (ii) during any period in
which the Company suspends the rights of a subscriber after
giving the Subscriber written notification of a Potential
Material Event (defined below) pursuant to Section 4.6 hereof.
4.3 EXPENSES OF REGISTRATION. Except as otherwise expressly set
forth, the Company shall bear all expenses incurred by the
Company in compliance with the registration obligation of the
Company, including, without limitation, all registration and
filing fees, printing expenses, fees and disbursements of
counsel for the Company incurred in connection with any
registration, qualification or compliance pursuant to this
Subscription Agreement and all underwriting discounts, selling
commissions and expense allowances applicable to the sale of
any securities by the Company for its own account in any
registration. All underwriting discounts, selling commissions
and expense allowances applicable to the sale by Subscriber of
Registrable Securities and all fees and disbursements of
counsel for the Subscriber shall be borne by the Subscriber.
10
4.4 INDEMNIFICATION.
(a) To the extent permitted by law the Company will
indemnify each Subscriber, each of its officers,
directors, agents, employees and partners, and each
person controlling such Subscriber, with respect to
each registration, qualification or compliance
effected pursuant to this Agreement, and each
underwriter, if any, and each person who controls any
underwriter, and their respective counsel against all
claims, losses, damages and liabilities (or actions,
proceedings or settlements in respect thereof)
arising out of or based on (i) any untrue statement
(or alleged untrue statement) of a material fact
contained in any prospectus, offering circular or
other document prepared by the Company (including any
related registration statement, notification or the
like) incident to any such registration,
qualification or compliance, or (ii) any omission (or
alleged omission) to state therein a material fact
required to be stated therein or necessary to make
the statements therein not misleading, or any
violation by the Company of the Act or any rule or
regulation thereunder applicable to the Company and
relating to action or inaction required of the
Company in connection with any such registration,
qualification or compliance, and subject to the
provisions of Section 4.4(c) below, will reimburse
each such Subscriber, each of its officers,
directors, agents, employees and partners, and each
person controlling such Subscriber, each such
underwriter and each person who controls any such
underwriter, for any legal and any other expenses as
they are reasonably incurred in connection with
investigating and defending any such claim, loss,
damage, liability or action, provided that the
Company will not be liable in any such case to the
extent that any such claim, loss, damage, liability
or expense arises out of or is based on any untrue
statement (or alleged untrue statement) or omission
(or alleged omissions) based upon written information
furnished to the Company by (or on behalf of) such
Subscriber or underwriter, or if the person asserting
any such loss, claim, damage or liability (or action
or proceeding in respect thereof did not receive a
copy of an amended preliminary prospectus or the
final prospectus (or the final prospectus as amended
and supplemented) at or before the written
confirmation of the sale of such Registrable
Securities to such person because of the failure of
the Subscriber or underwriter to so provide such
amended preliminary or final prospectus (or the final
prospectus as amended and supplemented); provided,
however, that the indemnity agreement contained in
this subsection shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability
or action if such settlement is effected without the
consent of the Company (which consent shall not be
unreasonably withheld), nor shall the Company be
liable in any such case for any such loss, claim,
damage, liability or action to the extent that it
arises out of or is based upon a violation which
occurs in reliance upon and in conformity with
written information furnished expressly for use in
connection with such registration by the Subscriber,
any such partner, officer, director, employee, agent
or controlling person of such Subscriber, or any such
underwriter or any person who controls any such
underwriter; provided, however, that the obligations
of the Company hereunder shall be limited to an
amount equal to the portion of net proceeds
represented by the Registrable Securities pursuant to
this Subscription Agreement.
(b) To the extent permitted by law, each Subscriber whose
Registrable Securities are included in any
registration, qualification or compliance effected
pursuant to this Subscription Agreement will
indemnify the Company, and its directors, officers,
agents, employees and each underwriter, if any, of
the Company's securities covered by
11
such a registration statement, each person who
controls the Company or such underwriter within the
meaning of the Act and the rules and regulations
thereunder, each other such Subscriber and each of
their officers, directors, partners, agents and
employees, and each person controlling such
Subscriber, and their respective counsel against all
claims, losses, damages and liabilities (or actions
in respect thereof) arising out of or based on any
untrue statement (or alleged untrue statement) of a
material fact contained in any such registration
statement, prospectus, offering circular or other
document, or any omission (or alleged omission) to
state therein a material fact required to be stated
therein or necessary to make the statements therein
not misleading, and will reimburse the Company and
such Subscribers, directors, officers, partners,
persons, underwriters or control persons for any
legal or any other expenses as they are reasonably
incurred in connection with investigating or
defending any such claim, loss, damage, liability or
action, in each case to the extent, but only to the
extent, that such untrue statement (or alleged untrue
statement) or omission (or alleged omission) is made
in such registration statement, prospectus, offering
circular or other document in reliance upon and in
conformity with written information furnished to the
Company by such Subscriber; PROVIDED, HOWEVER, that
the obligations of any Subscriber hereunder shall be
limited to an amount equal to the net proceeds to
such Subscriber from Registrable Securities sold
under such registration statement, prospectus,
offering circular or other document as contemplated
herein; provided, further, that the indemnity
agreement contained in this subsection shall not
apply to amounts paid in settlement of any such loss,
claim, damage, liability or action if such settlement
is effected without the consent of the Subscriber,
which consent shall not be unreasonably withheld or
delayed.
(c) Each party entitled to indemnification under this
Section (the "Indemnified Party") shall give notice
to the party required to provide indemnification (the
"Indemnifying Party") promptly after such Indemnified
Party has actual knowledge of any claim as to which
indemnity may be sought, and shall permit the
Indemnifying Party to assume the defense of any such
claim or any litigation resulting therefrom, provided
that counsel for the Indemnifying Party, who shall
conduct the defense of such claim or any litigation
resulting therefrom, shall be approved by the
Indemnified Party (whose approval shall not
unreasonably be withheld), and the Indemnified Party
may participate in such defense at such party's
expense; and provided further that if any Indemnified
Party reasonably concludes that there may be one or
more legal defenses available to it that are not
available to the Indemnifying Party, or that such
claim or litigation involves or could have an effect
on matters beyond the scope of this Agreement, then
the Indemnified Party may retain its own counsel at
the expense of the Indemnifying Party; and provided
further that the failure of any Indemnified Party to
give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this
Agreement unless and only to the extent that such
failure to give notice results in material prejudice
to the Indemnifying Party. No Indemnifying Party, in
the defense of any such claim or litigation, shall,
except with the consent of each Indemnified Party,
consent to entry of any judgment or enter into any
settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff
to such Indemnified Party of a release from all
liability in respect to such claim or litigation.
Each Indemnified Party shall furnish such information
regarding itself or the claim in question
12
as an Indemnifying Party may reasonably request in
writing and as shall be reasonably required in
connection with defense of such claim and litigation
resulting therefrom.
(d) If the indemnification provided for in this Section
is held by a court of competent jurisdiction to be
unavailable to an Indemnified Party with respect to
any loss, liability, claim, damage or expense
referred to herein, then the Indemnifying Party, in
lieu of indemnifying such Indemnified Party
hereunder, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such
loss, liability, claim, damage or expense in such
proportion as is appropriate to reflect the relative
fault of the Indemnifying Party on the one hand and
of the Indemnified Party on the other in connection
with the statements or omissions which resulted in
such loss, liability, claim, damage or expense as
well as any other relevant equitable considerations;
PROVIDED, HOWEVER, that the obligations of any
Subscriber hereunder shall be limited to an amount
equal to the net proceeds to such Subscriber from
Registrable Securities sold under such registration
statement, prospectus, offering circular or other
document as contemplated herein. The relative fault
of the Indemnifying Party and of the Indemnified
Party shall be determined by reference to, among
other things, whether the untrue or alleged untrue
statement of a material fact or the omission to state
a material fact relates to information supplied by
the Indemnifying Party or by the Indemnified Party
and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent
such statement or omission.
4.5 TRANSFER OR ASSIGNMENT OF REGISTRATION RIGHTS. The Registrable
Securities, and any related benefits to the Subscriber
hereunder may be transferred or assigned by the Subscriber to
a permitted transferee or assignee, provided that the Company
is given written notice of such transfer or assignment,
stating the name and address of said transferee or assignee
and identifying the Registrable Securities with respect to
which such registration rights are being transferred or
assigned; provided further that the transferee or assignee of
such Registrable Securities shall be deemed to have assumed
the obligations of the Subscriber under this Subscription
Agreement by the acceptance of such assignment and shall, upon
request from the Company, evidence such assumption by delivery
to the Company of a written agreement assuming such
obligations of the Subscriber.
4.6 REGISTRATION PROCEDURES. In the case of the registration
effected by the Company pursuant to this Subscription
Agreement, the Company will keep the Subscriber advised in
writing as to the initiation of each registration and as to
the completion thereof. The Company will:
(a) Prepare and file with the SEC such amendments and
supplements to such registration statement and the
prospectus used in connection with such registration
statement as may be necessary to comply with the
provisions of the Act with respect to the disposition
of securities covered by such registration statement;
(b) Respond as promptly as reasonably practicable to any
comments received from the SEC with respect to a
registration statement or any amendment thereto.
(c) Notify the Subscriber as promptly as reasonably
practicable and (if requested by any such person)
confirm such notice in writing no later than one
trading day following the day (A) when a prospectus
or any prospectus supplement or post-
13
effective amendment to a registration statement is
proposed to be filed and (B) with respect to a
registration statement or any post-effective
amendment, when the same has become effective;
(d) Furnish such number of prospectuses and other
documents incident thereto, including supplements and
amendments, as the Subscriber may reasonably request;
(e) Furnish to the Subscriber, upon request, a copy of
all documents filed with and all correspondence from
or to the SEC in connection with any such
registration statement other than non-substantive
cover letters and the like;
(f) Use its reasonable best efforts to avoid the issuance
of, or, if issued, obtain the withdrawal of (i) any
order suspending the effectiveness of a registration
statement, or (ii) any suspension of the
qualification (or exemption from qualification) of
any of the Registrable Securities for sale in any
jurisdiction, at the earliest practicable moment; and
(g) Use its reasonable best efforts to comply with all
applicable rules and regulations of the SEC.
Notwithstanding the foregoing, if at any time or from time to time after the
date hereof, the Company notifies the Subscriber in writing of the existence of
an event or circumstance that is not disclosed in the Registration Statement and
that may have a material effect on the Company or its business (a "Potential
Material Event"), the Subscriber shall not offer or sell any Registrable
Securities, or engage in any other transaction involving or relating to the
Registrable Securities, from the time of the giving of notice with respect to a
Potential Material Event until the Company notifies the Subscriber that such
Potential Material Event either has been added to the Registration Statement by
amendment or supplement or no longer constitutes a Potential Material Event;
PROVIDED, that the Company may not so suspend the right of Subscriber for more
than 120 days during any 12 month period.
4.7 STATEMENT OF BENEFICIAL OWNERSHIP. The Company may require the
Subscriber to furnish to the Company a certified statement as
to the number of shares of Common Stock beneficially owned by
such Subscriber and the controlling person thereof and any
other such information regarding the Subscriber, the
Registrable Securities held by the Subscriber and the intended
method of disposition of such securities as shall be
reasonably required with respect to the registration of the
Subscriber's Registrable Securities. The Subscriber hereby
understands and agrees that the Company may, in its sole
discretion, exclude the Subscriber's shares of Common Stock
(including such shares into which the Warrants are
exercisable) from the Registration Statement in the event that
the Subscriber fails to provide such information requested by
the Company within the time period reasonably specified by the
Company or is required to do so by law or the SEC.
4.8 COMPLIANCE. Subscriber covenants and agrees that such
Subscriber will comply with the prospectus delivery
requirements of the Act as applicable to such Subscriber in
connection with sales of Registrable Securities pursuant to
the registration statement required hereunder.
14
4.9 PIGGY-BACK REGISTRATIONS. If at any time during the
Effectiveness Period there is not an effective registration
statement covering all of the Registrable Securities and the
Company shall determine to prepare and file with the SEC a
registration statement relating to an offering for its own
account or the account of others under the Act of any of its
Common Stock, other than an offering of securities issued
pursuant to a Strategic Issuance (as defined below) and other
than a Form S-4 or Form S-8 registration statement (each as
promulgated under the Act or their then equivalents relating
to equity securities to be issued solely in connection with
any business combination transaction, acquisition of any
entity or business or equity securities issuable in connection
with stock option or other employee benefit plans), then the
Company shall send to the Subscriber (together with any other
holders of its Common Stock or Warrants possessing "piggyback
registration rights" comparable to those granted to the
Subscriber hereunder ("Rightsholders")) written notice of such
determination and, if within fifteen (15) days after receipt
of such notice, the Subscriber shall so request in writing,
the Company shall include in such registration statement all
or any part of such Registrable Securities such Subscriber
requests to be registered; provided that the Company shall not
be required to register any Registrable Securities pursuant to
this Section that are eligible for resale pursuant to Rule
144(k) promulgated under the Act; and provided further that
the Company may, without the consent of the Subscriber,
withdraw such registration statement before its becoming
effective if the Company or other stockholders have elected to
abandon the proposal to register the securities proposed to be
registered thereunder. If the registration statement is being
filed for an underwritten public offering, the Subscriber must
timely execute and deliver the usual and customary agreement
among the Company, such Subscriber and the underwriters
relating to the registration; If the registration statement is
being filed for an underwritten offer and sale by the Company
of securities for its own account and the managing
underwriters advise the Company in writing that in their
opinion the offering contemplated by the registration
statement cannot be successfully completed if the Company were
to also register the Registrable Securities of the Subscriber
requested to be included in such registration statement, then
the Company will include in the registration: (i) first, any
securities the Company proposes to sell, (ii) second, any
securities of any person whose securities are being registered
as a result of the exercise of a demand registration right,
and (iii) third, that portion of the aggregate number of
shares being requested for inclusion in the registration
statement by (X) the Subscriber and (Y) all other
Rightsholders, which in the opinion of such managing
underwriters can successfully be sold, such number of shares
to be taken PRO RATA from the Rightsholders on the basis of
the total number of shares being requested for inclusion in
the registration statement by each Rightsholder. "Strategic
Issuance" shall mean an issuance of securities: (i) in
connection with a "corporate partnering" transaction or a
"strategic alliance" (as determined by the Board of Directors
of the Company in good faith); (ii) in connection with any
financing transaction in respect of which the Company is a
borrower; or (iii) to a vendor, lessor, lender, or customer of
the Company, or a research, manufacturing or other commercial
collaborator of the Company, in a transaction approved by the
Board of Directors, provided in any case, that such issuance
is not being made primarily for the purpose of avoiding
compliance with this Subscription Agreement.
15
4.10 REPORTING COVENANT. So long as any Warrant has not been
exercised and so long as the Company is subject to the
reporting obligations under the Exchange Act, the Company
covenants to file (or obtain extensions in respect thereof and
file within the applicable grace period) all reports required
to be filed by the Company after the date hereof pursuant to
the Exchange Act. As long as any Warrant has not been
exercised, if the Company is not required to file reports
pursuant to the Exchange Act, it will prepare and furnish to
the Subscriber and make publicly available in accordance with
Rule 144(c) such information as is required for each
Subscriber to sell the Registrable Securities; PROVIDED,
HOWEVER, that the Company shall have no such obligation to
furnish and make publicly available such information to the
extent that the Registrable Securities are eligible for sale
pursuant to Rule 144(k).
5. MISCELLANEOUS
5.1 Any notice or other communication given hereunder shall be
deemed sufficient if in writing and sent by registered or
certified mail, return receipt requested, addressed to the
Company, at Ironclad Performance Wear Corporation, 0000 Xxxx
Xx Xxxxxxx Xxxx., Xx Xxxxxxx, Xxxxxxxxxx 00000, Attention: Xx
Xxxxxx, President, with a copy to (which shall not constitute
notice) Xxxxxx, Xxxxxxxx & Markiles, LLP, 00000 Xxxxxxx
Xxxxxxxxx, 00xx Xxxxx, Xxxxxxx Xxxx, Xxxxxxxxxx 00000,
Attention: Xxxxx Xxxxxxxx, Esq., and to the Subscriber at his
address indicated on the signature page of this Subscription
Agreement. Notices shall be deemed to have been given three
(3) business days after the date of mailing, except notices of
change of address, which shall be deemed to have been given
when received.
5.2 This Subscription Agreement may be amended through a written
instrument signed by the Subscriber, Ironclad and the Company;
provided, however, that the terms of Section 4 of this
Subscription Agreement may be amended without the consent or
approval of the Subscriber so long as such amendment applies
in the same fashion to the subscription agreements of all of
the other subscribers for Units in the Offering and at least
holders of a majority of the Units sold in the Offering have
given their approval of such amendment, which approval shall
be binding on all holders of Units.
5.3 This Subscription Agreement shall be binding upon and inure to
the benefit of the parties hereto and to their respective
heirs, legal representatives, successors and assigns. This
Subscription Agreement sets forth the entire agreement and
understanding between the parties as to the subject matter
hereof and merges and supersedes all prior discussions,
agreements and understandings of any and every nature among
them.
5.4 Notwithstanding the place where this Subscription Agreement
may be executed by any of the parties hereto, the parties
expressly agree that all the terms and provisions hereof shall
be construed in accordance with and governed by the laws of
the State of Delaware.
5.5 This Subscription Agreement may be executed in counterparts.
It shall not be binding upon the Company and Ironclad unless
and until it is accepted by the Company and Ironclad. Upon the
execution and delivery of this Subscription Agreement by the
Subscriber, this Subscription Agreement shall become a binding
obligation of the
16
Subscriber with respect to the purchase of Units as herein
provided; subject, however, to the right hereby reserved to
the Company to enter into the same agreements with other
subscribers and to add and/or to delete other persons as
subscribers.
5.6 The holding of any provision of this Subscription Agreement to
be invalid or unenforceable by a court of competent
jurisdiction shall not affect any other provision of this
Subscription Agreement, which shall remain in full force and
effect.
5.7 It is agreed that a waiver by either party of a breach of any
provision of this Subscription Agreement shall not operate, or
be construed, as a waiver of any subsequent breach by that
same party.
5.8 The parties agree to execute and deliver all such further
documents, agreements and instruments and take such other and
further action as may be necessary or appropriate to carry out
the purposes and intent of this Subscription Agreement.
5.9 The Company agrees not to disclose the names, addresses or any
other information about the Subscribers, except as required by
law, provided that the Company may provide information
relating to the Subscriber as required in any registration
statement under the Act that may be filed by the Company
pursuant to the requirements of this Subscription Agreement.
5.10 The obligation of the Subscriber hereunder is several and not
joint with the obligations of any other subscribers for the
purchase of Units in the Offering (the "Other Subscribers"),
and the Subscriber shall not be responsible in any way for the
performance of the obligations of any Other Subscribers.
Nothing contained herein or in any other agreement or document
delivered at the Closing, and no action taken by the
Subscriber pursuant hereto, shall be deemed to constitute the
Subscriber and the Other Subscribers as a partnership, an
association, a joint venture or any other kind of entity, or
create a presumption that the Subscriber and the Other
Subscribers are in any way acting in concert with respect to
such obligations or the transactions contemplated by this
Subscription Agreement. The Subscriber shall be entitled to
protect and enforce the Subscriber's rights, including without
limitation the rights arising out of this Subscription
Agreement, and it shall not be necessary for any Other
Subscriber to be joined as an additional party in any
proceeding for such purpose. The language used in this
Agreement will be deemed to be the language chosen by the
parties to express their mutual intent, and no rules of strict
construction will be applied against any party. The Subscriber
is not acting as part of a "group" (as that term is used in
Section 13(d) of the 0000 Xxx) in negotiating and entering
into this Subscription Agreement or purchasing the Units or
acquiring, disposing of or voting any of the underlying shares
of Common Stock or the Warrant Shares. The Company hereby
confirms that it understands and agrees that the Subscriber is
not acting as part of any such group.
[SIGNATURE PAGE FOLLOWS]
17
IN WITNESS WHEREOF, the parties have executed this Subscription
Agreement as of the day and year first written above.
----------------------------------- ------------------------------------
Signature of Subscriber Signature of Co-Subscriber
----------------------------------- ------------------------------------
Name of Subscriber Name of Co-Subscriber
[please print]
----------------------------------- ------------------------------------
Address of Subscriber Address of Co-Subscriber
----------------------------------- ------------------------------------
Social Security or Taxpayer Social Security or Taxpayer
Identification Number of Subscriber Identification Number of Co-Subscriber
------------------------------
Number of Units Subscribed For
Subscription Agreed to and Accepted
EUROPA TRADE AGENCY LTD. IRONCLAD PERFORMANCE WEAR CORPORATION
By: By:
-------------------------------- ----------------------------------
Name: Name:
------------------------------ --------------------------------
Title: Title:
----------------------------- -------------------------------
18
